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Jewish World Review Dec. 17,1999 /8 Teves, 5760

Thomas Sowell

Thomas Sowell
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Why we have crooked landlords -- MANY POLITICAL BATTLES pit the left against the right. But the December 14th run-off election for mayor of San Francisco pitted the far left (Mayor Willie Brown) against the farther left (Supervisor Tom Ammiano). California Republicans, who had fought Willie Brown for years -- both as mayor and as speaker of the state assembly before that -- now found themselves in the peculiar position of endorsing his honor's candidacy.

Willie Brown won. Doesn't he always? But this oddball election had some serious implications as well.

One of the issues between Brown and Ammiano was rent control. Both are for it, of course, but the mayor was willing to have a study done on the subject, which of course was anathema to Ammiano. Rent control is sacred to the left and you don't do factual studies on sacred subjects.

Actually, a study would do nothing more than give Mayor Brown wiggle room on this politically explosive issue. There have already been studies done around the world on the effects of rent control -- and they all show the same things.

Rent control has been followed by housing shortages from Sweden to Santa Monica. It has stopped the building of affordable housing right in its tracks in Melbourne and in Paris. It has led to landlords deliberately neglecting the upkeep of their buildings in New York and in Hong Kong.

It was not a conservative Chicago economist, but an official of the Communist government of Vietnam, who said that rent control had destroyed more housing in Hanoi than the American bombers did during the war. The reasons for this are not rocket science. It all goes back to the kinds of things you learn in the first couple of classes in Economics 1.

For example, people tend to demand more at a lower price than at a higher price -- surely not a breakthrough on the frontiers of knowledge. Neither is the fact that people tend to supply more when they are paid more.

Under rent control, more people demand more housing. It happens all over the world.

Swedish young people who before were living with their parents decided that they could afford to move out and get their own apartments after rent control went into effect. In New York, elderly people whose children have long since grown up and moved out still occupy large, rent-controlled apartments.

Meanwhile, in both places -- and in many others -- people on the outside looking in have a terrible time trying to find a place to stay. The supply of housing dries up because builders are reluctant to build under rent control and landlords reduce painting, repair, and maintenance, so that the existing housing stock deteriorates faster than normal.

One of the ugliest aspects of rent control is that it makes it virtually impossible for some honest landlords to make a living. When the amount of rent they are allowed to collect will not cover all the services they are required by law to provide, it is obviously a losing proposition.

That virtually guarantees that rent-controlled buildings will pass out of the hands of honest and decent landlords and into the hands of unscrupulous characters who know how to scrimp on maintenance, fall behind in taxes, take bribes from people desperate for a place to stay and play all the other games that enable them to make a quick buck before the building falls apart or is taken over by the city for delinquent taxes.

Rent control advocates are forever using such unscrupulous landlords as arguments for rent control laws and tenants' rights laws. But, in reality, such laws make such landlords inevitable.

In a free market, landlords have no choice but to maintain their property if they want to keep the apartments rented. But that is no longer necessary when rent control creates a housing shortage. Moreover, when the building is valuable, they dare not fall behind in taxes for fear that the city will take it over.

"Affordable housing" is a lovely phrase, but making anything artificially affordable means making it easier to waste. Those on the inside looking out get the benefits, while those on the outside looking in pay the price. Some people pay with their lives when they are sleeping outdoors on New York's streets in the winter.

Too many people are too satisfied to be in favor of things that sound good and too lazy to ask about the consequences.

JWR contributor Thomas Sowell, a fellow at the Hoover Institution, is author, most recently, of The Quest for Cosmic Justice.


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©1999, Creators Syndicate